20-F









Exhibit 4.42 


Execution
Copy 


SHARE PURCHASE AGREEMENT


This Share Purchase Agreement is entered into
as of the 15th day of November 2007, by and between:


	
 

	
 


	
1.

	
Ituran Location and Control Limited, a
  company organised under the laws of the State of Israel of 3 Hashikma Street,
  Azour, Israel (the “Seller”); 


	
 

	
 


	
2.

	
Telematics Wireless Ltd, a company
  organised under the laws of the State of Israel of 26 Hamalacha Street Industrial Zone, Holon, Israel (the
“Company”);


	
 

	
 


	
3.

	
ST
  Electronics (Info-Comm Systems) Pte Ltd, a company incorporated in Singapore
  and having its registered office at 100 Jurong East Street 21, Singapore
  609602 (hereinafter referred to as “STEE
  InfoComm” or the “Purchaser”); 


	
 

	
 


	
WHEREAS: 


	
 

	
 


	
(A)

	
Immediately
  prior to the Closing, the Seller shall be the owner of 2,960,633 Ordinary
  Shares and 10 Management Shares in the Company, equal to 93.93% (the “Shareholding Percentage”) of the issued
  and outstanding share capital (not including dormant shares) of the Company;


	
 

	
 


	
(B)

	
Immediately
  prior to the Closing, the Continuing Shareholders shall be the owners
  collectively of the Continuing Shareholder Shares, equal to the Continuing
  Shareholder Percentage;


	
 

	
 


	
(C)

	
The Seller
  wishes to sell such shares in the Company to the Purchaser, free and clear of
  all Security Interests, in accordance with the terms of this Agreement; and


	
 


	
(D)

	
The
  Purchaser wishes to acquire such shares in the Company in accordance with the
  terms of this Agreement.














	
 

	
 

	
 


	
NOW THEREFORE, the parties agree as
  follows:


	
 

	
 

	
 


	
1.

	
DEFINITIONS


	
 

	
 

	
 


	
 

	
1.1

	
The following terms shall have the
  following meanings:








	
 

	
 

	
 


	
 

	
$

	
US Dollars


	
 

	
 

	
 


	
 

	
Adjustment Amount

	
As defined in Section 2.2(h).


	
 

	
 

	
 


	
 

	
Adjustment Escrow

	
As defined in Section 2.2(h).


	
 

	
 

	
 


	
 

	
Adjustment Escrow Agreement

	
As defined in Section 2.2(h).


	
 

	
 

	
 


	
 

	
Affiliate

	
An entity controlling, controlled by or
  under common control with a person and if such entity is a person, then the
  immediate family of such person. For the purpose of this definition of
  Affiliate, “control” shall mean the ability to direct the activities of the
  relevant entity and shall include the holding of 50% or more of the issued
  and outstanding share capital, voting rights or other ownership interests of
  such entity or the right to appoint 50% or more of the directors (or the
  equivalent thereof) in such entity.


	
 

	
 

	
 


	
 

	
Baal Inyan

	
As defined in Section 3.2(a).


	
 

	
 

	
 


	
 

	
Board of
  Directors

	
The board of directors of the
  Company.


	
 

	
 

	
 


	
 

	
Business Day

	
A day on which the major banks
  are open in both Israel and Singapore.





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Cash

	
Cash in hand or on deposit at
  a bank or financial institution, certificates of deposit maturing within one
  year after any relevant date of calculation, debt obligations of the State of
  Israel, the United States of America or any member state of the European
  Union and any other customary cash equivalent investment, including portfolio
  investments in marketable securities. Cash shall exclude both short - long
  -term customer advances. 


	
 

	
 

	
 


	
 

	
Closing

	
As defined in Section 2.2.


	
 

	
 

	
 


	
 

	
Closing Date

	
As defined in Section 2.2.


	
 

	
 

	
 


	
 

	
Closing Date Balance Sheet

	
The
  Company’s pro forma balance sheet listing all assets and liabilities of the
  Company, including the balance of Cash and Debts, on a consolidated basis as
  at the Closing Date in the form attached hereto as Schedule 1(a) and prepared by the Company in accordance with
  GAAP consistently applied with the Company’s past practice. 


	
 

	
 

	
 


	
 

	
Closing Date Financial
  Statements

	
As defined in Section 2.5.


	
 

	
 

	
 


	
 

	
Continuing Shareholders

	
The shareholders of the Company
  listed in Appendix A.


	
 

	
 

	
 


	
 

	
Continuing Shareholder
  Percentage

	
5.50% of the issued and
  outstanding share capital of the Company (not including dormant shares).


	
 

	
 

	
 


	
 

	
Continuing Shareholder Shares

	
173,337 Ordinary Shares of the
  Company.


	
 

	
 

	
 


	
 

	
Current Ratio

	
The quotient of the Company’s
  current assets to current liabilities.





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Damages

	
As defined
  in Section 7.1.


	
 

	
 

	
 


	
 

	
Debt

	
All
  indebtedness of the Company and the Subsidiaries of the Company, including
  all the monetary debts, borrowings, loans, draw-downs under any lines of
  credit, any convertible loan that has not been converted or repaid prior to
  or at the Closing, transaction expenses that have not been paid prior to the
  Closing, any finance lease, any sale of receivables other than on a non-recourse
  basis, any amount raised under a transaction having the commercial effect of
  a borrowing (including advance payments from customers) and any non-ordinary
  course financial commitments to Employees in connection with the transactions
  contemplated hereby or the Closing which have not been satisfied prior to or
  at the Closing, tax liabilities payment of which are due and not yet been
  paid, accrued bonuses, but excluding trade debt incurred in the ordinary
  course of business, such as accounts payable. 


	
 

	
 

	
 


	
 

	
Dividend Distribution Immediately Prior to Closing

	
Repurchase
  of 185,404 ordinary shares of the Company for the aggregate purchase price of
  $5,000,000 from the Seller, which upon repurchase by the Company shall become
  dormant. Such repurchase shall not be taken into account in any reduction in
  the Purchase Price pursuant to Sections 2.1(ii)-(iv) and for the purpose of
  calculating the Quick Ratio and Current Ratio. 


	
 

	
 

	
 


	
 

	
Employee Matters

	
As listed in
  Section 7.1


	
 

	
 

	
 


	
 

	
Employees

	
All
  employees employed by the Company and the Subsidiary. 





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Enterprise Value

	
$85,000,000,
  as adjusted in accordance with Section 2.1(a)(iii).


	
 

	
 

	
 


	
 

	
Escrow

	
As defined
  in Section 2.2(g)


	
 

	
 

	
 


	
 

	
Escrow Agreement

	
As defined
  in Section 2.2(g)


	
 

	
 

	
 


	
 

	
Escrow Amount

	
As defined
  in Section 2.2(g)


	
 

	
 

	
 


	
 

	
Expert

	
As defined in Section 2.5.


	
 

	
 

	
 


	
 

	
Financial Statements

	
As defined in Section 3.3


	
 

	
 

	
 


	
 

	
Fully Diluted Basis

	
As defined in Section
  2.1(a)(i).


	
 

	
 

	
 


	
 

	
GAAP

	
Generally accepted accounting
  principles in the United States.


	
 

	
 

	
 


	
 

	
Grants

	
As defined in Section 3.12.


	
 

	
 

	
 


	
 

	
Indemnified Party

	
As defined
  in Section 7.3.


	
 

	
 

	
 


	
 

	
Indemnifying Party

	
As defined
  in Section 7.3.





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Intellectual Property

	
All
  intellectual property rights, whether or not patentable, including without
  limitation, rights in algorithms, binary code, brands, business methods,
  computer programs, computer software, concepts, confidential information,
  firmware, composition of matter or materials, certification marks, collective
  marks, copyright, customer lists, data, databases, designs (whether
  registered or unregistered), derivative works, discoveries, distributor
  lists, documents, domain names, file layouts, formulae, goodwill, ideas,
  improvements, industrial designs, information, innovations, inventions,
  integrated circuits, know-how, logos, manufacturing information, mask works,
  materials, methods, moral rights, object code, original works of authorship,
  patents, patent applications, patent rights, including but not limited to any
  and all continuations, divisions, reissues, re-examinations or extensions,
  plans, processes, proprietary technology, reputation, research results,
  research records, semiconductor chips, service marks, software, source code,
  specifications, statistical models, supplier lists, systems, techniques,
  technology, trade secrets, trademarks, trade dress, trade names, trade
  styles, and technical information, and any rights analogous to the foregoing.


	
 

	
 

	
 


	
 

	
Key Management

	
The
  management of the Company listed in Schedule
  1(b).


	
 

	
 

	
 


	
 

	
KLIC

	
As defined
  in Section 3.7(d)


	
 

	
 

	
 


	
 

	
Management Shares

	
The
  Management Shares of the Company, nominal value of NIS 1.00 each.


	
 

	
 

	
 


	
 

	
Material Contracts

	
As defined
  in Section 3.7(a).


	
 

	
 

	
 


	
 

	
Minimum Net Cash

	
Net Cash in an amount equal to $3.5
  million. 


	
 

	
 

	
 


	
 

	
Minimum Net Tangible Assets

	
Net Tangible Assets is equal to the
  consolidated shareholders’ equity, net of goodwill and intangible assets of
  the Company, at a minimum of $16 million at Closing.





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NTA Shortfall

	
As defined
  in Section 2.1(a)(iv).


	
 

	
 

	
 


	
 

	
Net Cash

	
Cash less
  Debt at Closing. 


	
 

	
 

	
 


	
 

	
OCS

	
As defined
  in Section 3.12.


	
 

	
 

	
 


	
 

	
Ordinary Shares

	
The Ordinary
  Shares of the Company, nominal value of NIS 1.00 each.


	
 

	
 

	
 


	
 

	
Organisational Documents

	
In respect of any entity, the memorandum of
  association, articles of association, certificate of incorporation, by-laws,
  certificate(s) of designation or other constitutional documents of any type.


	
 

	
 

	
 


	
 

	
Purchase Price

	
As defined in Section 2.1.


	
 

	
 

	
 


	
 

	
Purchase Shares

	
As defined in Section 2.1.


	
 

	
 

	
 


	
 

	
PwC

	
As defined in Section 2.5.


	
 

	
 

	
 


	
 

	
Quick Ratio

	
The quotient of the Company’s
  current assets less inventory and contracts in process to the Company’s
  current liabilities, in each case on a consolidated basis.


	
 

	
 

	
 


	
 

	
Security Interest

	
any interest or equity of any person
  (including any right to acquire, option, or right of pre-emption) or any
  mortgage, charge, pledge, lien, attachment, assignment or any other
  encumbrance or security interest or arrangement of whatsoever nature over or
  in the relevant property.


	
 

	
 

	
 


	
 

	
Shareholding Percentage

	
As defined in the recitals hereto.





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Subsidiary

	
Telematics Wireless Corp., a
  private company incorporated under the laws of Delaware.  


	
 

	
 

	
 


	
 

	
Tax

	
Any
  past, present and future income, value added and other taxes, levies,
  imposts, deductions, charges and withholdings in the nature of taxes
  whatsoever (including,
  without limitation, taxes concerning income, capital gains, sales, value
  added, franchise, withholding, payroll, employment, social security,
  severance, stamp or property tax) together with linkage differentials,
  interest thereon and penalties with respect thereto, if any, and any payments
  made on or in respect thereof.


	
 

	
 

	
 


	
 

	
Tax Exempt
  Income

	
Any
  tax exempt income under section 51 of the Law for Encouragement of Capital
  Investments, 1959 (the “Encouragement Law”)
  as in effect prior to amendment number 60 of the Encouragement Law, and any
  tax exempt income under sections 51-51N of the Encouragement Law as is
  currently drafted (i.e. any income from an “Alternative Route” or from
  “Benefited Plans”). 


	
 

	
 

	
 


	
 

	
2007 Profit
  Threshold

	
As
  defined in Section 2.1(a)(iii)


	
 

	
 

	
 


	
 

	
2008 Profit
  Threshold

	
As
  defined in Section 2.1(a)(iii)








	
 

	
 

	
 


	
 

	
1.2

	
Words and defined terms denoting the
  singular number include the plural and vice versa and the use of any gender
  shall be applicable to all genders.


	
 

	
 

	
 


	
 

	
1.3

	
The paragraph headings are for the sake of
  convenience only and shall not affect the interpretation of this Agreement.





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1.4

	
The recitals, schedules, appendices,
  annexes and exhibits hereto form an integral part of this Agreement.


	
 

	
 

	
 


	
2.

	
PURCHASE AND SALE OF THE SHARES


	
 

	
 

	
 


	
 

	
2.1(a)

	
Agreement to Purchase and Sell








	
 

	
 

	
 


	
 

	
(i)

	
Subject to and in accordance with the terms
and conditions of this Agreement, the Seller shall sell to the Purchaser, and
the Purchaser shall purchase from the Seller a total of 10 Management Shares
and 2,960,633Ordinary Shares (the
“Purchase Shares”), constituting at the Closing all of the Management Shares
and the Shareholding Percentage of the issued and outstanding shares of the
Company on a fully diluted basis (including but not limited to all warrants,
options, convertible securities and convertible debt, but not including
dormant shares) as of the date of Closing, as represented in the
Capitalisation Table set out in Schedule 3.2(a) (“Fully Diluted Basis”) for
an aggregate purchase price not exceeding US$79,842,897.00 (the “Purchase
Price”), as adjusted below.  


	
 

	
 

	
 


	
 

	
(ii)

	
The Purchase
  Price shall be based on an Enterprise Value for 100% of the fully diluted
  shares of the Company such that the Purchase Price shall equal the
  Shareholding Percentage times Enterprise Value. Enterprise Value assumes Net
  Cash at Closing in an amount not less than Minimum Net Cash. In the event
  that Net Cash at Closing is less than the Minimum Net Cash, such shortfall
  shall be deducted from the Purchase Price.


	
 

	
 

	
 


	
 

	
(iii)

	
In the event
that the profit before tax of the Company as appearing in the audited
financial statements for the Company for the calendar years 2007 is less than
US$7,681,000 (the “2007 Profit Threshold”), the Enterprise Value shall be
reduced, based on the following formula: 


	
 

	
 

	
 


	
 

	
 

	
Reduction in
Enterprise Value = Shortfall below US$7,681,000 x 1.975 provided that if the
profit before tax as appearing in the audited financial statements of the
Company for the calendar year 2008 exceeds $9,953,000 (the “2008 Profit
Threshold”), the reduction in Enterprise Value shall be decreased, based on
the following formula: 


	
 

	
 

	
 


	
 

	
 

	
Decrease in
  Reduction of Enterprise Value = Excess above US$9,953,000 x 1.975.





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If the
  operating expenses of the Company in the last quarter of 2007 are higher or
  lower than the average quarterly operating expenses of the Company for the
  first three quarters of 2007 by a factor of more than 5%, the amount of the
  excess above 5% (higher or lower) shall be disregarded in calculating the
  profit before tax for the Company for the calendar year 2007.


	
 

	
 

	
 


	
 

	
 

	
For the
  avoidance of any doubt, the Enterprise Value shall not be increased even if
  the profit before tax of the Company for the calendar year 2007 or 2008
  exceeds the 2007 Profit Threshold or the 2008 Profit Threshold respectively.


	
 

	
 

	
 


	
 

	
 

	
The
  Purchaser shall provide the Seller with the 2007 and 2008 Financial
  Statements immediately following their publication for the purpose of verifying
  the calculations made pursuant to this section.


	
 

	
 

	
 


	
 

	
(iv)

	
The Purchase
Price shall be reduced by any shortfall in the consolidated
Net Tangible Assets of the Company on the Closing Date below the Minimum Net
Tangible Assets (“NTA Shortfall”). Such shortfall shall reduce the Purchase
Price by the formula: Shareholding Percentage times NTA Shortfall. 


	
 

	
 

	
 


	
 

	
(v)

	
If the Current Ratio calculated in accordance with the Closing Date
  Balance Sheet shall be less than 1.7, or if the Quick Ratio calculated in
  accordance with the Closing Date Balance Sheet shall be less than 1.5, the
  Purchase Price will be reduced by Shareholding Percentage times the amount
  that must be added to the current assets of the Company in order to cause the
  Current Ratio and the Quick Ratio to be satisfied as of the Closing Date.





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2.1(b)

	
The Parties agree and acknowledge that prior to the Closing and
  subject thereto, the Dividend Distribution Immediately Prior to Closing shall
  be performed by the Company and Seller. 


	
 

	
 

	
 


	
 

	
2.2

	
Closing


	
 

	
 

	
 


	
 

	
 

	
The Closing of the purchase and sale of the
Purchase Shares (the “Closing”) shall take place at the offices of Herzog,
Fox & Neeman, 4 Weizmann St., Tel Aviv, Israel, within seven (7) Business
Days of the satisfaction of all the conditions precedent to Closing as set
out herein, or thereafter at such other time, date and place as may be
mutually agreed by the parties in writing (the time and date of the Closing
being herein referred to as the “Closing Date”). In the event that the Closing does not take place within 120 days
of the date of this Agreement, this Agreement shall be deemed to be
terminated without giving rise to any right or claim by any party hereto,
excluding claims for breaches of obligations by any party hereto prior to
such termination.  


	
 

	
 

	
 


	
 

	
 

	
At the Closing, the following actions and
  occurrences will take place, all of which shall be deemed to have occurred
  simultaneously and no action shall be deemed to have been
  completed and no document or certificate shall be deemed to have been
  delivered, until all actions are completed and all documents and certificates
  delivered:


	
 

	
 

	
 


	
 

	
 

	
(a)

	
The Seller
  will deliver to the Purchaser: 








	
 

	
 

	
 


	
 

	
(i)

	
share
  transfer forms for the Purchase Shares duly executed by the Seller in favour
  of the Purchaser (or as it shall otherwise in writing direct) accompanied by
  their respective share certificates;


	
 

	
 

	
 


	
 

	
(ii)

	
such
  waivers, consents or such other documents as may be required to give good
  title to the Purchase Shares and to enable the Purchaser or its nominees to
  become their registered holders;





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(iii)

	
the
resignation of the existing directors of the Company as set out in Schedule
2.2(a)(iii) with a written acknowledgment from each such resigning director
that he has no claim or has relinquished all existing or potential claims
whatsoever against the Company or the Purchaser whether in respect of
compensation for loss of office, damages, loans or otherwise, except any
claims that are covered under any indemnity undertaking of the Company and/or
covered by the current directors and officers insurance policy of the Company
disclosed by the directors prior to the date hereof or for any event arising
after the date hereof, disclosed prior to the Closing; 


	
 

	
 

	
 


	
 

	
(iv)

	
the opinion of legal counsel to the Seller,
dated as of the Closing Date, substantially in the form attached hereto as
Schedule 2.2(a)(iv); 


	
 

	
 

	
 


	
 

	
(v)

	
the opinion of legal counsel to the
Company, dated as of the Closing Date, substantially in the form attached
hereto as Schedule 2.2(a)(v); and 


	
 

	
 

	
 


	
 

	
(vi)

	
Certification from the Seller confirming
the matters referred to in Section 2.3(a) and (b), in the form attached
hereto as Schedule 2.2(a)(vi). 


	
 

	
 

	
 


	
 

	
(vii)

	
the payment of accrued bonuses for the
  Company’s management and staff for the period in 2007 up to Closing
  accompanied by such documentary proof evidencing the same.


	
 

	
 

	
 


	
 

	
(viii)

	
a copy of the Company’s bank statements
  covering the period from July 1, 2007 until Closing.








	
 

	
 

	
 


	
 

	
(b)

	
The Seller
  will procure that a board meeting of the Company be held at Closing at which:
  (i) there shall be submitted and accepted the resignations of the outgoing
  directors as referred to in Section 2.2(a)(iii); (ii) the transfers of the
  Purchase Shares shall be approved for registration and new share certificates
  issued in favour of the Purchaser or its nominees shall be delivered to the
  Purchaser; (iii) new signatory rights of the Company shall be adopted as
  approved by the Purchaser; and (iv) the appointment of new directors by the
  Purchaser pursuant to Section 2.2(e).





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(c)

	
The Company shall record the transfer of
  the Purchase Shares from the Seller to the Purchaser on the Company’s
  shareholders’ register and other records and, promptly after the Closing, the
  Company shall make all filings and registrations as may be necessary to
  perfect such transfer and shall deliver copies thereof to
  the Purchaser.
  The Company shall cancel any options, warrants or other rights to purchase or
  to convert any security or obligation into any shares of its share capital.


	
 

	
 

	
 


	
 

	
(d)

	
The
  Purchaser shall pay the Purchase Price less the Escrow Amount and the
  Adjustment Amount to the Seller in immediately available funds to the account
  of the Seller at
  Bank Hapoalim, Branch No. 641 (Nahalat Yitzhak), Account No. 507860, SWIFT: POALILIT,
  Account Name: Ituran Location and Control. Such
  payment shall be in U.S. dollars. 


	
 

	
 

	
 


	
 

	
 

	
Notwithstanding the foregoing, the Purchaser shall be entitled to
  withhold from any payments due hereunder any amounts it is required by
  Israeli law to withhold in respect of any Israeli withholding tax at the
  maximum rate for such withholding, unless the Purchaser is provided with an
  exemption from such withholding tax in respect of such payment. The Purchaser
  acknowledges receipt of such exemption for payment of the Purchase Price.


	
 

	
 

	
 


	
 

	
(e)

	
The
  Purchaser shall deliver to the Company a written notice of the appointment of
  Mr. Lau Thiam Beng to the Board of Directors.


	
 

	
 

	
 


	
 

	
(f)

	
The Company shall deliver to the Seller,
  full, unconditional and irrevocable release of the Seller’s guarantee for the
  Company (a) from Bank Hapoalim B.M. and (b) from Atmel Sarl (or
  alternatively, provide an irrevocable and unconditional indemnification from
  the Purchaser, reasonably satisfactory to the Seller, for any liability on
  the part of the Seller in respect of the said guarantee in favour of Atmel
  Sarl). 





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(g)

	
The
Purchaser shall deposit the amount of $7.5 million into an escrow account
(the “Escrow Amount” and the “Escrow”, respectively). Subject to the
provisions of Section 7 below, the Purchaser will be entitled to be
indemnified from the Escrow for the matters set forth in Section 7.1, or as
otherwise set forth in this Agreement. Upon the second (2nd)
anniversary of the Closing Date, all remaining amounts in the Escrow will be
delivered to the Seller less the amount of any pending claims, all in
accordance with and subject to the terms and procedures of the Escrow
Agreement in the form attached as Schedule 2.2(g) hereto (the “Escrow
Agreement”). It is clarified that recourse by the Purchaser against the
Escrow shall not limit or impair any right or remedy to
which the Purchaser may be entitled pursuant to law or this Agreement.  


	
 

	
 

	
 


	
 

	
(h)

	
The
Purchaser shall deposit the amount of US$5 million (the “Adjustment Amount”)
into a separate escrow account (the “Adjustment Escrow”). In the event that
the profit before tax of the Company as appearing in the audited financial
statements of the Company for the calendar year 2007 is no less than the 2007
Profit Threshold, and no adjustments are required pursuant to Section
2.1(ii), (iv) and (v), the Adjustment Amount shall immediately be released to
the Seller. In any other case, the Adjustment Amount (or any part thereof
representing any possible reduction in the Purchase Price as a result of an
adjustment to the Enterprise Value in accordance with Section 2.1 (a)(ii)-(v)
above) shall be retained in the Adjustment Escrow until publication of the
audited financial statements of the Company for the calendar year 2008.
Subject to the aforesaid, the Adjustment Amount shall be dealt with in
accordance with and subject to the terms of the escrow agreement in the form
attached as Schedule 2.2(h) hereto (the “Adjustment Escrow Agreement”). It is
clarified that recourse by the Purchaser against the Adjustment Escrow shall
not limit
or impair any right or remedy to which the Purchaser
may be entitled pursuant to law or this Agreement.  





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2.3

	
Purchaser’s Conditions to Closing


	
 

	
 

	
 


	
 

	
 

	
The Purchaser’s obligations to consummate
  the purchase of the Purchase Shares hereunder are subject to the fulfilment,
  prior to or at the Closing, of each of the following conditions (any or all
  of which may be waived by the Purchaser):








	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
the representations and warranties of
  Seller were true and correct in all material respects when
  made and shall
  be true and correct in all material respects at the Closing as though made
  again at the Closing Date;


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
the Seller shall have performed and
  complied with all obligations and covenants required by this Agreement to be
  performed or complied with by them prior to or at the Closing;


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
the
  execution and the delivery of this Agreement and the consummation of the
  transactions contemplated hereby shall have been approved by all regulatory
  authorities or third parties whose approvals are required by law or necessary
  to preserve the rights and benefits currently enjoyed by the Company after
  the Closing. Without limiting the generality of the foregoing, such approvals
  include the Investment Centre, the Israeli Anti-Trust Authority (unless
  confirmation is received from the Israeli Anti-Trust Authority that no
  antitrust approval is required in Israel) and the Ministry of Communications
  regarding the Company’s Trade License for Establishment and Maintenance of
  Communication Stations; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
no action,
  proceeding, investigation, regulation or legislation shall have been
  instituted, threatened or proposed before any court, governmental agency or
  legislative body to enjoin, restrain, prohibit or obtain substantial damages
  in respect of, or which is related to, or arises out of, this Agreement or
  the consummation of the transactions contemplated hereby; 





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(e)

	
the
  Purchaser shall have received a true and correct copy of every consent,
  approval and waiver required for the execution of this Agreement and the
  consummation of the transactions contemplated hereby;


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
all corporate and other proceedings in
  connection with the approval and fulfilment of this Agreement (and any of its
  ancillary documents, schedules or exhibits), including all transactions
  contemplated at the Closing and all documents incident thereto, including the
  implementations of the provision thereof, shall have been taken in a manner
  satisfactory in form and substance to the Purchaser and the Purchaser shall
  have received counterpart original / certified copies of such documents; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
between the date of this
  Agreement and the Closing Date, there shall have been no material adverse
  change in the business, operations, condition (financial or otherwise),
  assets or liabilities of the Company or the Subsidiary (or any
  material adverse change in any of the Ituran, Arad, Korea or China projects
  beyond that described in Schedule 3.4(a)). Without derogating from the above,
  it is clarified that an unconditional notice in
  writing from KLIC stating that the Second Phase and Third Phase of the
  project in Korea are terminated shall be deemed a material adverse change
  pursuant to this Agreement (regardless of the reason for such termination);


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
All shareholders of the
  Company shall have irrevocably waived any rights of first refusal and
  preemptive rights applying to the purchase of the Purchase Shares by the
  Purchaser or any future issuance of shares of the Company.


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
All options or shares, as
  applicable, granted pursuant to prior employee option plans or restricted
  stock plans shall have been either in the case of options expired or fully
  exercised, or in the case of shares under restricted stock plans, shares shall
  no longer be eligible for issuance, except for new shares for Key Management
  issued immediately prior to the Closing.


	
 

	
 

	
 

	
 


	
 

	
 

	
(j)

	
The Continuing Shareholders
  shall continue to hold the Continuing Shareholder Shares constituting the
  Continuing Shareholder Percentage.





16









	
 

	
 

	
 

	
 


	
 

	
 

	
(k)

	
The Company
  shall have delivered to the Purchaser the Closing Date Balance Sheet, at
  least three Business Days prior to the Closing.


	
 

	
 

	
 

	
 


	
 

	
 

	
(l)

	
The Company
  shall continue to own 100% of the issued shares and all other rights of the Subsidiary, and
  10.28% of the issued shares of Locationet Ltd.


	
 

	
 

	
 

	
 


	
 

	
 

	
(m)

	
All charges registered against the assets
  of the Company shall have been discharged (except for charges in favour of
  banks for extending ordinary business credit lines to the Company).


	
 

	
 

	
 

	
 


	
 

	
 

	
(n)

	
The Company
shall have made a provision in its books and records with respect to ageing
inventory in an amount of $524, 000 less any amount paid to the Company by
the Seller by way of purchase price for any of the inventory referred to in
Schedule 2.3(n) hereto. 


	
 

	
 

	
 

	
 


	
 

	
2.4

	
Seller’s Conditions to Closing








	
 

	
 

	
 

	
 


	
 

	
 

	
The Seller’s obligations to consummate the
  sale of the Purchase Shares to the Purchaser at the Closing are subject to
  the fulfilment, prior to or at the Closing, of each of the following
  conditions (any or all of which may be waived by the Seller):


	
 

	
 

	
 


	
 

	
 

	
(a)

	
all representations and warranties of the
  Purchaser contained herein shall be true and correct in all material respects
  at the time of the Closing as though made again at that time; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
the Purchaser shall have performed and
  complied with all obligations and covenants required by this Agreement to be
  performed or complied with by the Purchaser prior to or at the
  Closing; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
the execution and delivery of this
  Agreement and the consummation of the transactions contemplated hereby, shall
  have been approved by all regulatory authorities required by law.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
no action, proceeding,
  investigation, regulation or legislation shall have been instituted,
  threatened or proposed before any court, governmental agency or legislative
  body to enjoin, restrain, prohibit or obtain substantial damages in respect
  of, or which is related to, or arises out of, this Agreement or the
  consummation of the transactions contemplated hereby.





17









	
 

	
 

	
 

	
 


	
 

	
2.5

	
Post-Closing
  Adjustment








	
 

	
 

	
 

	
 


	
 

	
 

	
The Company
shall prepare, in accordance with GAAP applied on a consistent basis with the
historical Financial Statements, a balance sheet, income statements and cash
flow statements for the period starting on July 1, 2007 and ending on the
Closing Date (the “Closing Date Financial Statements”). Such Closing Date
Financial Statements shall be reviewed or audited, at the discretion of the
Purchaser, by auditors selected by the Purchaser. 


	
 

	
 

	
 


	
 

	
 

	
The Closing
  Date Financial Statements shall be prepared and delivered to the Seller
  within 120 days of the Closing. The parties shall thereupon make the
  adjustments to the Purchase Price referred to in Section 2.1(a)(ii), (iv) and
  (v), based on the amounts reflected in the Closing Date Financial Statements.
  If there is any discrepancy between:


	
 

	
 

	
 


	
 

	
 

	
(x)

	
the Purchase
  Price adjusted as aforesaid in accordance with the amounts reflected in the
  Closing Date Financial Statements; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(y)

	
the Purchase
  Price adjusted in accordance with Section 2.1 (a)(ii), (iv) and (v) based on
  the amounts reflected in the Closing Date Balance Sheet;


	
 

	
 

	
 

	
 


	
 

	
 

	
and such
discrepancy exceeds $1 million, the Purchaser shall pay the amount of any
excess over $1 million in the adjusted Purchase Price based on the Closing
Date Financial Statements figures (if higher) or the Seller shall pay the
amount of such excess over $1 million to the Purchaser if the adjusted
Purchase Price based on the Closing Date Balance Sheet figure are higher, as
the case may be. Unless disputed, such excess payment shall be made within 10
days from the Company’s adoption of the Closing Date Financial Statements. If
either party objects to the figures reflected on the Financial Statements or
the adjustments to be made based thereon, the parties may negotiate in good
faith to settle such dispute and where such dispute is not settled within 60
days of the commencement of negotiations, either party shall have the right
to refer the matter to PricewaterhouseCoopers (“PwC”), acting as an expert
and not as arbitrator (the “Expert”). In the event that PwC shall not be able
to act as the Expert, and the parties are unable to select another Expert
within 30 days from the relevant party’s objection, then the Expert shall be
appointed by the President of the Institute of Certified Public Accountants
in Israel at either party’s written request, a copy of which shall be
simultaneously provided to the other party hereof, provided that such Expert
shall be one of the “Big 4” accounting firms.  





18









	
 

	
 

	
 


	
 

	
 

	
The Company
  and the Purchaser shall provide the Seller and, subject to confidentiality
  undertakings, the Expert with all data and documents and will allow the
  Seller and the Expert to inspect and make copies of the relevant records of
  the Company and the Subsidiary as the Seller may
  reasonably require in connection with the adjustment contemplated herein. 


	
 

	
 

	
 


	
 

	
 

	
The Expert
  will be instructed to provide a decision in writing within 30 days of its
  appointment. Such decision will be final and binding upon the parties. The
  expenses of the Expert will be borne by the parties equally, and shall not be
  chargeable to the Company’s books. 


	
 

	
 

	
 


	
 

	
 

	
Any payment
  that the Purchaser or the Seller may be obligated to make pursuant to the
  decision of the Expert will be made within thirty (30) days from such
  decision. 








	
 

	
 

	
 


	
3.

	
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY


	
 

	
 

	
 


	
 

	
The Seller hereby represents and warrants
  to the Purchaser as follows:


	
 

	
 

	
 


	
 

	
3.1

	
Constitution and Compliance 








	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
The Company is duly incorporated and validly
  existing under
  the laws of the State of Israel, with power and authority to carry on its
  business as now being conducted and as contemplated to be conducted. The
  Company has at all times carried on its business and affairs in all material
  respects in accordance with its Memorandum and Articles of
  Association and all applicable laws and regulations, and there is no
  violation or default with respect to any statute, regulation, order, decree,
  or judgement of any court or any governmental entity which could have a
  material adverse effect upon the assets or business of the Company. The
  Company is duly qualified to do business and in good standing in each
  jurisdiction in which the Company currently conducts business.





19









	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
The Purchaser has received true and
  accurate copies of the Organisational Documents of the Company and the
  Subsidiary as of the date of this Agreement.


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
The Company and the Subsidiary maintain all
  corporate, shareholder or other records and registries required by law. True
  and complete copies of all such documents have been delivered to the
  Purchaser.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
The Company and the Subsidiary have made
and filed all returns, particulars, resolutions and documents required by the
Companies Law 1999 or any other legislation to be filed with the Registrar of
Companies or any other governmental or local authority, except as disclosed
in Schedule 3.1(d).  


	
 

	
 

	
 

	
 


	
 

	
3.2

	
Capitalisation


	
 

	
 

	
 


	
 

	
 

	
(a)

	
Schedule 3.2(a) sets out the authorised and
issued share capital of the Company (together with the names and holdings of
each of the shareholders of the Company) as of the date of this Agreement and
immediately prior to and after the Closing. At and immediately after Closing,
the Continuing Shareholders shall continue to hold the Continuing Shareholder
Shares constituting the Continuing Shareholder Percentage. 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
The shareholdings of the
Continuing Shareholders in the Seller are listed in Schedule 3.2(a). None of
the Continuing Shareholders of the Company is a related party to the Seller
(“Baal Inyan”).  


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Other than as listed in Schedule 3.2(a),
there are no outstanding or authorised subscriptions, options, warrants,
calls, rights, commitments, or any other agreements of any character directly
or indirectly obligating the Company or the Subsidiary to issue (i) any
additional shares or other securities or (ii) any securities or debt
convertible into, or exchangeable for, or evidencing the right to subscribe
for, any shares other securities.  





20









	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
Neither the Company nor the Subsidiary has
adopted or authorised any plan for the benefit of its officers, employees, consultants
or
directors which requires or permits the issuance, sale, purchase, or grant of
any shares of the Company’s or the Subsidiary’s share capital or other
securities or any securities convertible into, or exercisable or exchangeable
for, or evidencing the right to subscribe for any such shares or securities, other than as set
forth in Schedule 3.2(a). 


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
All securities of the Company and the
  Subsidiary have been issued in compliance with all laws, rules and
  regulations, including applicable securities laws and the Organisational
  Documents of the Company. The Company is not subject to any obligation
  (contingent or otherwise) to repurchase or otherwise acquire or retire any of its shares or any
  warrants, options or other rights to acquire its shares.


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
Schedule 3.2(e) lists all equity interests
of the Company and the Subsidiary. The Company owns all of the issued and
outstanding share capital of the Subsidiary free and clear of all Security
Interests. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
All
  dividends or other distributions of profits including all taxes associated
  with such dividends declared, made or paid since the date of incorporation of
  the Company and the Subsidiary have been declared, made
  or paid in accordance with laws of the State of Israel and the Company’s and
  Subsidiary’s Organisational Documents.


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
The uncalled
  share capital of the Company is not subject to any Security Interest.


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
The Subsidiary is the only
  active entity in which the Company holds more than 50% of the issued and
  outstanding share capital, voting rights or other ownership interests. 





21









	
 

	
 

	
 

	
 


	
 

	
3.3

	
Financial Statements








	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
The Seller
has delivered to the Purchaser audited financial statements of the Company
for the years ended December 31, 2005 and December 31, 2006 and the reviewed financial statements of the
Company ended June 30, 2007 (the “Financial
Statements”).  


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
The
  Financial Statements are prepared in accordance with the books and
  records of Company and are accurate in all material respects. The Financial
  Statements present in a true, complete and fair view, the financial position,
  assets and liabilities of the Company as of the dates indicated and the
  results of its operations for such periods. The Financial
  Statements have been prepared in accordance with GAAP. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
There are no
  off-balance sheet liabilities, claims, or obligations of any nature, whether
  accrued, absolute, contingent, anticipated, or otherwise, whether due or to
  become due, that are not shown or provided for in the Financial Statements.
  The liabilities of the Company were incurred in the ordinary course of the
  Company’s business.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
All of the
  accounts receivable shown on the balance sheets included in the Financial
  Statements have been collected or are good and collectible in the aggregate
  recorded amounts thereof (less the allowance for doubtful accounts also
  appearing in the Financial Statements and net of returns and payment
  discounts allowable by the Company’s policies) and can reasonably be
  anticipated to be paid in full without outside collection efforts in
  accordance with their terms of order and payment, and are not subject to
  counterclaims or setoffs in excess of recorded reserves.


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
The
  Financial Statements: 








	
 

	
 

	
 


	
 

	
(i)

	
make
  adequate provision for depreciation of the fixed assets of the Company having
  regard to their original cost and estimated life;





22









	
 

	
 

	
 


	
 

	
(ii)

	
make due
  provision for any bad or doubtful debts;


	
 

	
 

	
 


	
 

	
(iii)

	
make
  adequate provision for severance pay, vacation pay and all social benefits
  due to employees; 


	
 

	
 

	
 


	
 

	
(iv)

	
make
  adequate provisions for warranty claims pursuant to the Company’s policy;


	
 

	
 

	
 


	
 

	
(v)

	
set out correctly all such reserves or provisions for Taxes as are
  necessary on the basis of the rates of such Taxes now in force to cover all
  Taxes (present and future) in respect of any transaction occurring prior to
  the date of the Financial Statements, liable to be assessed on the Company
  for which the Company is accountable up to such date; 


	
 

	
 

	
 


	
 

	
(vi)

	
set out the inventory and fixed assets at the lower of the cost price
  or market value; and 


	
 

	
 

	
 


	
 

	
(vii)

	
adequately
  record all assets and liabilities of the Company.








	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
There has been no material change in the amount of “contracts in
  process” based on the latest cost budget and profit forecast for any of the
  Korea and China projects compared with the corresponding figures for
  “contracts in process” on which the financial statements of the Company for
  the year ended December 31, 2006 and the period ended June 30, 2007 have been
  based.


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
No event has
  occurred during the period covered by the Financial Statements that has
  resulted in the profits of the Company in respect of such period being
  abnormally high or low. The Financial Statements are not affected by any
  materially unusual or non-recurring items, except as disclosed in the
  Financial Statements.


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
The
  inventory shown on the Financial Statements consists of items of quantity,
  quality and kind usable in the normal course of the business of the Company.





23









	
 

	
 

	
 

	
 


	
 

	
3.4

	
Business to Date


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
Since December 31, 2006, (and in the case
of paragraph (i) below, since June 30, 2007) except as provided in Schedule
3.4(a) attached hereto: 








	
 

	
 

	
 


	
 

	
(i)

	
neither the Company nor the Subsidiary has
  entered into any sale, purchase order, borrowing or other financial
  transaction in excess of $750,000 per transaction or greater than $2,000,000
  in the aggregate as to both; 


	
 

	
 

	
 


	
 

	
(ii)

	
there has been no material adverse change
  in the business, operations, assets, liabilities, or condition (financial or
  otherwise) of the Company or the Subsidiary or any
  material adverse change in any of the Ituran, Arad, Korea or China projects
  (beyond that described in Schedule 3.4(a)). Without derogating from the
  above, it is clarified that an unconditional notice
  in writing from KLIC stating that the Second Phase and Third Phase of the
  project in Korea are terminated shall be deemed a material adverse change
  pursuant to this Agreement (regardless of the reason for such termination); 


	
 

	
 

	
 


	
 

	
(iii)

	
neither the Company nor the Subsidiary has
  declared or paid any cash dividend or made any distribution on its shares,
  other than the Dividend Distribution Immediately Prior to Closing or any
  other distribution which does not reduce the Net Cash below $5 million and
  does not breach the ratios provided for in Sections 2.1 (a)(iv) and (v) with
  respect to Net Tangible Assets, the Current Ratio and the Quick Ratio; and


	
 

	
 

	
 


	
 

	
(iv)

	
there has been no sale, assignment, or
  transfer of any tangible asset of the Company or the Subsidiary except in the
  ordinary course of business and no sale, assignment, or transfer of any
  patent, trademark, trade secret, or other intangible asset of the Company.





24









	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Since June 30th,
2007, neither
the Company nor the Subsidiary have incurred any debts or
financial liabilities
of any nature whatsoever, fixed or variable or contingent, or known, which
are currently unpaid, except as shown on Schedule 3.4(b) (except for debts or
financial
liabilities of up to $500,000 in the aggregate as to both the Company and the
Subsidiary. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
There are no outstanding debts owed to the
Company or the Subsidiary other than accounts receivable in the ordinary
course of business except as detailed in Schedule 3.4(c).  


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
There are no bad or doubtful debts on the
  Company’s or the Subsidiary’s books at the
  date hereof, except as specified in the Financial Statements.


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
Full and accurate details of all bank
accounts, overdrafts, loans, guarantees or other financial facilities
outstanding or available to the Company or the Subsidiary are contained in
Schedule 3.4(e). 


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
The Dividend
  Distribution Immediately Prior to Closing is a permitted distribution under
  Section 302 of the Companies Law 1999.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
The Dividend Distribution
  Immediately Prior to Closing has been paid or will be paid net of any
  withholding or deduction required by law and will be treated in the financial
  statements of the Company as having been distributed in full from retained
  earnings.


	
 

	
 

	
 

	
 


	
 

	
3.5

	
Properties


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
Full and accurate details of the Company’s
and the Subsidiary’s tangible properties and tangible assets
are contained in Schedule 3.5 to this Agreement (except for inventory). The
Company and the Subsidiary each has good title to, or valid leasehold
interest in, all properties and assets used in its business or owned by it,
free and clear of all Security Interests. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
No asset of
  the Company has been acquired for any consideration other than by way of
  bargain at arm’s length.





25









	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
Other than the shares of the Subsidiary owned
  by the Company, neither the Company nor the Subsidiary is the holder or the
  beneficial owner of any share, debenture, mortgage, or security (or interest
  therein) in any other active company or corporation, or a member of any
  partnership or unincorporated association or limited liability company, except for shares in
  LocatioNet Ltd. and portfolio investment in listed shares. 


	
 

	
 

	
 

	
 


	
 

	
3.6

	
Taxation


	
 

	
 

	
 

	
 


	
 

	
 

	
For the purpose of this
  Section 3.6 the term “Company” shall include the Company and the Subsidiary.


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
All reports, returns or other information
  required to be filed by or on behalf of the Company or the Subsidiary
  regarding Taxes have been filed on a timely basis with the appropriate
  governmental authorities in all requisite jurisdictions and all such returns,
  reports or other information were true, correct and complete in all material
  respects. The Company has final Israeli Tax assessments until December 31,
  2004.


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
To the best knowledge of the Seller, all
  Taxes due and payable with respect to the period ended December 31st
  2006 and through October 15, 2007 have been fully and timely paid and the
  Company and the Subsidiary do not have any liability for Taxes with respect
  to such period in excess of the amounts so paid.


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
There is no dispute with any Tax authority
  in Israel or elsewhere in relation to the affairs of the Company or the
  Subsidiary. There are no circumstances which will or may, whether by lapse of
  time or the issue of any notice of assessment or otherwise, give rise to any material
  dispute with any relevant Tax authority in relation to the Company’s or the
  Subsidiary’s liability or accountability for Taxes under currently enacted
  statutes and regulations, any claim made by it, any relief, deduction, or
  allowance afforded to either such company, or in relation to the status or
  character of the Company or the Subsidiary under or for the purpose of any
  provision of any legislation relating to Taxes.





26









	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
The Company is in compliance in all
  material respects with all terms and conditions of any Tax exemptions, Tax
  holiday or other Tax reduction agreement, approval or order of any government
  and, to the Company’s knowledge, subject to the receipt of the Investment
  Center approval, the consummation of the Transaction will not have any
  adverse effect on: (i) the validity and effectiveness of any such Tax
  exemptions, Tax holiday or other Tax reduction agreement or order; and (ii)
  the continued qualification for the Grants or the terms or duration thereof
  or require any recapture of any previously claimed incentive under such
  Grants.


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
The Company’s issued and
  paid share capital, including share premium, is higher than NIS 5,000,000.


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
The Company has not waived
  any statute of limitations with respect to Taxes or agreed to any extension
  of time with respect to a Tax assessment or deficiency.


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
The Company had final tax assessments until
  and including the year 2004. Since 2005, the Company has not requested,
  offered to enter into or entered into any agreement or other arrangement, or
  executed any waiver, providing for any extension of time within which: (i) to
  file any tax return covering any Taxes for which the Company is or may be
  liable; (ii) to file any elections, designations or similar filings relating
  to Taxes for which the Company is or may be liable; (iii) the Company is
  required to pay or remit any Taxes or amounts on account of Taxes; or (iv)
  any governmental authority may assess or collect Taxes for which the Company
  is or may be liable.


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
The Company has not made, prepared or filed
  any elections, designations or similar filings relating to Taxes or entered
  into any agreement or other arrangement in respect of Taxes or tax returns
  that has effect for any period ending after the Closing Date.





27









	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
The Company has duly and timely withheld
  all Taxes and other amounts required by law to be withheld by it (including
  Taxes and other amounts required to be withheld by it in respect of any
  amount paid or credited or deemed to be paid or credited by it to or for the
  account or benefit of any person, including any employees, officers or
  directors and any non-resident person), and has duly and timely remitted to
  the appropriate governmental authority such Taxes and other amounts required
  by law to be remitted by it.


	
 

	
 

	
 

	
 


	
 

	
 

	
(j)

	
Except as set forth in Schedule 3.6(j),
the Company does not conduct and has not conducted any trade or business in
any other country except Israel and does not have a permanent establishment
in any other country except Israel.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(k)

	
Set
forth in Schedule 3.6(k) are the net operating loss, net capital loss,
credits, charitable contribution, surplus expenses and any other Tax
attributes carry forward (by type of carry forward and expiration date, if
any) of the Company, until December 31, 2006.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(l)

	
The
  Company has delivered to the Purchaser accurate copies of the Israeli Income
  Tax Returns of the Company for the year ended December 31, 2005 and shall
  have delivered by Closing the Israeli Income Tax Return of the Company for
  the year 2006.


	
 

	
 

	
 

	
 


	
 

	
 

	
(m)

	
Neither the Company nor the Seller (in
  connection with its shares in the Company) are subject to any restrictions or
  limitations pursuant to Part E2 of the Israeli Income Tax Ordinance or
  pursuant to any tax ruling made with reference to the provisions of Part E2,
  that may be violated as a result of the consummation of this Agreement.


	
 

	
 

	
 

	
 


	
 

	
 

	
(n)

	
All books and records which the Company is
  required under Israeli law to keep for Tax purposes (including all documents
  and records likely to be needed to defend any challenge by any governmental
  entity to the transfer pricing of any transaction) have been duly kept in
  accordance with all applicable requirements and are available for inspection
  at the premises of the Company. 





28









	
 

	
 

	
 

	
 


	
 

	
 

	
(o)

	
Since January 1, 2007, the Company has not performed and was
  not part of any action or transaction that is classified as a “reportable
  transaction” under section 131(g) of the Israeli Income Tax Ordinance and the
  regulations promulgated thereunder. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(p)

	
All the agreements that the Company has
signed with the Israeli Tax Authority and all the rulings and decisions
received by the Company from the Israeli Tax Authority are detailed in Schedule
3.6(p). 


	
 

	
 

	
 

	
 


	
 

	
3.7

	
Capital Expenditure and Contracts


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
Schedule 3.7(a) contains a true and
complete list of all contracts, agreements, instruments, leases, licenses,
arrangements, or undertakings of any nature, written or oral, of the Company
and the Subsidiary that are in effect including of the
types listed below provided
each of them is material to Company or the Subsidiary (“Material Contracts”):  








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(i)

	
any contract exceeding the monetary value
  of $500,000;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(ii)

	
any hire, hire purchase, credit sale or
  conditional sale agreement or any contract providing for payment on deferred
  terms in respect of assets purchased by the Company or the Subsidiary;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(iii)

	
any Security Interest on, over or
  reflecting any asset of the Company or the Subsidiary (including the issued
  or unissued share capital of the Company or the Subsidiary), and any
  agreement or commitment to give or create any such Security Interest;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(iv)

	
any guarantee, indemnity, security or other
  agreement pursuant to which the Company or the Subsidiary agrees to become
  directly or contingently liable for any obligation of any other person;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(v)

	
any guarantee, indemnity, security or other
  agreement pursuant to which any third party agrees to become directly or
  contingently liable for any obligation of the Company or the Subsidiary;





29









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(vi)

	
any agreement, instrument or other
  arrangement creating any indebtedness of the Company or the
  Subsidiary;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(vii)

	
any power of attorney given by the Company
  or the Subsidiary with respect to any material asset or business of the
  Company or the Subsidiary;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(viii)

	
any agreement, instrument or deed pursuant
  to which a third party is entitled or authorised to bind or commit the
  Company or the Subsidiary to any obligation;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(ix)

	
any application or award of any grant or
  allowance which is now liable or may in the future become liable to be repaid
  or which imposes any other obligations on the Company or the Subsidiary;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(x)

	
any contract with any director, officer,
employee (other than contracts relating to the employment of such employee,
particulars of which are disclosed in Schedule 3.9(a)), shareholder of the
Company or the Subsidiary or any Affiliate of any of the foregoing;  


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(xi)

	
any agreement restricting the competitive
  freedom of the Company or any Subsidiary to provide and take goods and
  services by such means and from and to such persons as it may from time to
  time think fit (including any exclusive licenses made by such entities or contracts
  with other entities limiting rights);


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(xii)

	
any long-term, unusual or
  onerous contract, arrangement or undertaking or any contract, arrangement or
  undertaking not made in the ordinary course of business;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(xiii)

	
any joint venture, consortium
  or other partnership arrangement or agreement;





30









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(xiv)

	
any contract or other
  arrangement which will or may, according to its terms, be terminated as a
  result of the consummation of the transactions contemplated by this
  Agreement; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(xv)

	
any contracts or arrangements
  of whatever nature which cannot be terminated without giving rise to any
  liabilities whatsoever by giving three months notice or less.








	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
The
  Purchaser has received true, correct, and complete translated copies (or
  where oral, written descriptions) of all Material Contracts.


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
All Material
Contracts are in full force and effect subject to any matters referred to in
Schedule 3.4(a), the Company and the Subsidiary (as appropriate) has performed in all material respects all of
its obligations under each Material Contract, and, to the best of the
Seller’s knowledge, all third parties with whom the Company or the Subsidiary has transacted business have performed in all
material respects
all of their obligations thereunder which were due to have been performed. No
party to a Material Contract has made a claim to the effect that the Company
or the Subsidiary has failed to perform a material obligation thereunder, nor has
any such party notified the Company of an intention to terminate or not renew
any such contracts. There are no circumstances known to the Company or the
Seller which could cause (i) any Material Contract to be terminated or
rescinded by any other party or (ii) their terms to be worsened or the
Company or the Subsidiary prejudiced as a result of anything done or omitted or permitted
to be done by the Company or the Subsidiary. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
The Ituran Technology, as defined in the VLU Production Agreement
dated 6 September 2006 between the Company and Korean Location Information
(“KLIC”), is owned in part by the Seller. 





31









	
 

	
 

	
 

	
 


	
 

	
3.8

	
Litigation


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
There are no
  civil, criminal, arbitration or administrative proceedings involving the
  Company, the Subsidiary, including claims on
  which, to the best knowledge of the Seller, the Company, the Subsidiary may be vicariously liable. No such proceedings and no
claims of
  any nature are pending or to the best knowledge of the Seller threatened by
  or against the Company, the Subsidiary or the directors of the
  Company, the Subsidiary or any such person or in respect whereof the Company, the Subsidiary is liable to indemnify any party
concerned and, to the best
  knowledge of the Seller, there are no facts likely to give rise to any such
  proceedings.


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Neither the
  Company nor the Subsidiary is subject to any order
  or judgement given by any court or governmental agency or has been a party to
  any undertaking or assurance given to any court or governmental agency which
  is still in force nor are there any facts or circumstances (with or without
  the giving of notice or lapse of time) which would be likely to result in the
  Company or the Subsidiary
  becoming subject to such an order or judgement or
  being required to be a party to any such undertaking or assurance.


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
To the best
  knowledge of the Seller, none of the Company, the Subsidiary, the directors of the Company or the Subsidiary or any of the
  employees thereof is the subject of any investigation, enquiry, process or
  request for information in respect of any of the activities of the Company or
  the Subsidiary by any competent authority and no such procedures are pending
  or threatened and, having made due and careful enquiries, the Seller knows of
  no facts which are likely to give rise to any such proceedings.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
The Company
  has not received any complaint in writing regarding (and to the best
  knowledge of the Seller, neither the Company nor the Subsidiary has sold)
  products which are or may in any material aspect be faulty or defective or
  which do not comply in any material respect with any warranties or
  representations expressly or impliedly made by the Company or the Subsidiary.





32









	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
The Company
  and the Subsidiary have obtained all licences, consents, approvals,
  permissions, permits, certificates and authorities necessary for the carrying
  on of its business in the places and in the manner in which such business is
  now carried on including pursuant to all environmental legislation all of
  which are valid and subsisting and the Company knows of no reason or of any
  fact or circumstances (with or without the giving of notice or lapse of
  time), which would be likely to give rise to any reason why any of them
  should be suspended, cancelled, revoked or not renewed.


	
 

	
 

	
 

	
 


	
 

	
3.9

	
Employees


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
A list of all the directors,
officers,
employees and consultants (excluding consultants receiving less than $10,000
per year, lawyers and accountants) of the Company and the Subsidiary (the
“Employees”) is
attached hereto as Schedule 3.9(a). Schedule 3.9(a) also shows all benefits
(including share options or rights) payable or which the Company or the
Subsidiary, as relevant, is bound to provide (whether now or in the future)
to each Employee.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
No key employee of the Company or the
  Subsidiary has been dismissed in the last six months or has given notice of
  termination of his employment except for Mr. Ron Shamai. Mr. Eddy Kaffry’s
  employment by the Company is for a fixed period of time until August 2010.
  Mr. Avry Franco and Mr. Roman Sternberg’s employment by the Company is for a
  fixed period of time until 31 December 2007. Their employment agreements are
  renewed automatically unless the Company decides to discontinue their
  employment. No such decision was yet made to date. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
The Seller has delivered true
  and complete copies of all employment and consultancy
  agreements (including
  any agreements between the Company or the Subsidiary and any
  such Employee concerning Intellectual Property, confidentiality and non-competition)
  under
  which the Employees are engaged.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Except for
extension orders of common application to all employees in Israel, all
collective bargaining agreements with any labour union or any local or
subdivision thereof or any extension orders applicable to the Company or the Subsidiary are listed in Schedule 3.9(c).  





33









	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
There are no
  material customs or customary practices regarding Employees that could be
  deemed to be binding on the Company or the Subsidiary.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
There are no agreements or arrangements, whether written or not, for the payment of any
  pensions, allowances, lump sums or other like benefits on retirement or on
  death or termination or during periods of sickness or disablement for the
  benefit of any Employee or former Employee of the Company or
  the Subsidiary or for the benefit of the dependants of any such person in
  operation at the date hereof except as provided in the agreements delivered to the Purchaser pursuant
  to
  Section 3.9(c) hereto and except with regard to Ms. Etti Inbar. The Company
  and the Subsidiary have fulfilled all their obligations under any law or agreement to the Employees 


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
Attached as Schedule 3.9(e) is a true and
complete copy of all share or stock option plans approved by the Company or
the Subsidiary. Currently there are no outstanding options granted pursuant
thereto. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
The
  Company and the Subsidiary has complied with
  all material legislative or other official provisions relating to Employees, and their terms and conditions of employment or
engagement and has made all deductions and payments to the
  Income Tax Authorities and the National Insurance
  Institute required to be made by law.


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
Any
  liabilities with regard to severance pay and accrued vacation days due to all
  the Employees according to any law or agreement (including but not limited
  to: any personal or collective agreement, extension order or custom in the
  workplace) are fully funded and the Seller is not aware of any circumstances
  whereby any Employee may have any claim for compensation on termination of
  employment beyond the said funded liabilities with regard to severance pay
  and accrued vacation days. The Seller has not received any claim to be made
  by any Employee for payment of compensation arising from the acquisition of
  the Purchase Shares by the Purchaser as contemplated hereby.





34









	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
To the best
  knowledge of the Seller, all consultants (except for Mr Ishay Sagiv) are
  rightly classified as consultants and cannot be reclassified by the courts or
  any other authority as employees of the Company or the Subsidiary. No
  consultant is entitled to any rights under the labor laws of any applicable
  jurisdictions, including severance pay. All said consultants have received
  all of the rights to which they are entitled according to any applicable law.
  Any individuals employed by manpower companies which are engaged by the
  Company for the provision of services to the Company cannot be reclassified
  as employees of the Company or the Subsidiary and are not entitled to any
  employment entitlements from either the Company or the Subsidiary. 


	
 


	
 

	
3.10

	
Insurance


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
Each of the Company and the Subsidiary is
  insured in amounts, scope and covering such risks which the Company believes
  is adequate. All such insurance policies are in full force and effect.


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Full and accurate copies of the insurance
policies of the Company and the Subsidiary have
been delivered to the Purchaser. A list of such policies is contained in
Schedule 3.10. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
Neither the Company nor the Subsidiary has
  done or suffered anything to be done which has rendered or might render any
  polices of insurance taken out by them void or voidable or which might result
  in a material increase in premiums and the Company and the Subsidiary have
  complied with all conditions attached to such policies.


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
There is no material claim outstanding
  under any of such policies and nor are there, to the best of the Seller’knowledge,
  any circumstances likely to give rise to a material claim.





35









	
 

	
 

	
 

	
 


	
 

	
3.11

	
Intellectual Property


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
A full list of all
registrations and applications for registrations of Intellectual Property and
renewals thereof, the applicable jurisdiction,
registration number (or application number) and date issued (or date filed)
is described in Schedule 3.11(a). Except as set out in Schedule
3.11(a)(ii), such Intellectual Property is owned outright by the
Company, free and clear of any rights of any third party, including any
Security Interests. The Company has the right to use all of the patents set
out in Schedule 3.11(a)(ii) pursuant to an agreement dated 25 November 1999
between the Seller, Tadiran Ltd. and the Company, and an agreement dated 1
January 1997, between Tadiran Ltd. and the Company (as amended on 24 November
1999).  


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Except as disclosed in
Schedule 3.11(b), neither the Company nor the Subsidiary has
licensed any Intellectual Property from third parties (not including off the
shelf software licensed from third parties and not to be incorporated in
intellectual property distributed by the Company or the Subsidiary).  


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
Except as disclosed in
Schedule 3.11(c), neither the Company nor the Subsidiary has
granted any licence of any Intellectual
Property to any third parties, and except as granted by the Company to its
subcontractors.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
To the best knowledge and
  belief of the Seller, the Company will be able to obtain or acquire rights to
  use all of the Intellectual Property required for the Mesh Networks product.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
The Company owns or
  has the right to use all of the Intellectual Property required for the Mesh
  Networks product, to the best knowledge of the Company, without the payment
  of royalties to any third party except for payments made in accordance
  with the TeleTrac Agreement and to Arad (for sales to China). Sales from the
  Mesh Product line were not projected in the Business Plan.





36









	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
No Intellectual Property used or proposed
  to be used in the business of the Company or the Subsidiary as currently conducted
  or as contemplated to be conducted, has, to the best knowledge of the Company
  or the Seller, infringed or infringes upon any Intellectual Property rights
  of others. The use of the Intellectual Property in the business of the
  Company or the Subsidiary as currently conducted will not constitute an
  infringement, misappropriation or misuse of any Intellectual Property rights
  of any third party. No third party has the right to assert any claim
  regarding the use of, or challenging or questioning the Company’s or the
  Subsidiary’s right or title in, any of such Intellectual Property.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
The Seller does not believe
  that it is necessary to use any inventions of any of the Employees (or
  persons that the Company or the Subsidiary
  currently intends to engage) made prior to their employment or engagement by
  the Company or the
  Subsidiary.


	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
The Company and the Subsidiary have taken
  all reasonable measures, including measures against unauthorised disclosure,
  to protect the secrecy, confidentiality of their Intellectual
  Property. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
Except as disclosed in
Schedule 3.11 (g)(i), all Intellectual Property that has been developed or is
currently being developed on behalf of the Company or the Subsidiary by any
Employee or other third party is or shall be the sole property of the Company
or the Subsidiary. 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Each of the Employees are obligated under a
written agreement to retain in confidence the proprietary and confidential
information of the Company and/or the Subsidiary, including the Intellectual
Property in a form attached hereto as Schedule 3.11 (g)(ii). 


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
None of the current products
  of the Company requires royalty payments to the OCS. The Company participates in the Magnet
  consortium and uses certain technology of the Magnet consortium which
  includes Intellectual Property funded by the OCS. 





37









	
 

	
 

	
 


	
 

	
3.12

	
Grants and Benefits


	
 

	
 

	
 


	
 

	
 

	
Schedule
3.12 provides a complete list of all pending and outstanding grants,
incentives and subsidies, and applications therefore (collectively, “Grants”)
from the government of the State of Israel or any agency thereof, or from any
foreign governmental or administrative agency, granted to the Company or the Subsidiary, including, without limitation, (i)
Approved Enterprise Status
from the Investment Centre, (ii) grants from the Office of the Chief
Scientist (the “OCS”) and (iii) grants from the BIRD Foundation.  


	
 

	
 

	
 


	
 

	
 

	
The
Purchaser has received true and accurate copies of all documents evidencing
Grants submitted by the Company or the Subsidiary and of all letters of approval, and supplements thereto, granted
to the Company or the Subsidiary. Schedule 3.12 includes
the aggregate amounts of each Grant, and the aggregate outstanding
obligations thereunder of the Company or the Subsidiary with respect to royalties, or the outstanding amounts to be paid
by the OCS to the Company or the Subsidiary. The Company or the Subsidiary, as appropriate, is in compliance, in all material
respects, with
the terms and conditions of their respective Grants and has duly fulfilled,
in all material respects, all the undertakings relating thereto. The Seller
is not aware of any event or other set of circumstances which might lead to
the revocation or material modification of any of the Grants. 


	
 

	
 

	
 


	
 

	
 

	
To the best knowledge of the Company, there
  are no outstanding liabilities on the part of the Company of the Subsidiary
  to make any royalty or other payment with respect to the Grants.


	
 

	
 

	
 


	
 

	
3.13

	
Brokers and Finders


	
 

	
 

	
 


	
 

	
 

	
Neither the Company, nor any of its
  Employees or the Subsidiary has employed or made any agreement with any
  broker, finder or similar agent or any person or firm, which will result in
  the obligation of the Company or the Purchaser to pay any finder’s fee,
  brokerage fees or commission or similar payment in connection with the
  transactions contemplated hereby.


	
 

	
 

	
 


	
 

	
3.14

	
Insolvency


	
 

	
 

	
 


	
 

	
 

	
No
  insolvency proceedings of any kind have been filed against the Company or the
  Subsidiary
  and neither the Company nor the Subsidiary has stopped payment or is insolvent or unable to pay its debts as
  and when they fall due.





38









	
 

	
 

	
 


	
 

	
3.15

	
Environmental








	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
Neither the
  Company nor the Subsidiary (or any assets or
  properties which the Company or the Subsidiary occupies or uses or has
  occupied or used), have been the subject of any environmental audit or any
  environmental evaluation, assessment, study or test.


	
 


	
 

	
 

	
(b)

	
Neither the
  Company nor the Subsidiary (or anyone acting on their behalf) has stored,
  treated, transported or disposed of any hazardous substance other than in a safe
  manner in accordance with applicable law. “Hazardous substance” means any
  substance which might damage or pollute the environment (including surface
  water, ground water, air and land) or be a hazard to human beings.


	
 

	
 


	
 

	
3.16

	
Full Disclosure


	
 

	
 


	
 

	
 

	
(a)

	
Neither this
  Agreement nor any certificates made or delivered by the Seller in connection
  herewith contains any untrue statement of a material fact or omits to state a
  material fact necessary to make the statements herein or therein not
  misleading, in view of the circumstances in which they were made.


	
 

	
 


	
 

	
 

	
(b)

	
All information or documents concerning the
  Company supplied in writing to the Purchaser by the Seller, the Company or
  its or their agents during the due diligence process was, when given, true
  and accurate and complete in all material respects and there is no material
  fact or matter which has not been disclosed in writing which renders any such
  material information or document untrue or misleading at the date of this
  Agreement.


	
 

	
 


	
 

	
3.17

	
Status of Telematics Beheer
  B.V.


	
 

	
 

	
 


	
 

	
 

	
Telematics Beheer B.V. was
  liquidated under the laws of Netherlands prior to the Closing.





39









	
 

	
 

	
 


	
4.

	
REPRESENTATIONS AND WARRANTIES OF THE SELLER 


	
 

	
 


	
 

	
The Seller
  represents and warrants to the Purchaser as follows:


	
 

	
 

	
 


	
 

	
4.1

	
Incorporation


	
 

	
 

	
 


	
 

	
 

	
The Seller
  is duly incorporated and validly existing under the laws of the State
  of Israel, with power and authority to carry on its business as now being
  conducted.


	
 

	
 

	
 


	
 

	
4.2

	
Authority to Transact


	
 

	
 

	
 


	
 

	
 

	
The Seller
  has the capacity and authority to execute and deliver this Agreement, to
  perform hereunder and to consummate the transactions contemplated hereby. The
  board of directors of the Seller has approved the execution and performance
  of this Agreement and all other corporate action on the part of the Seller
  and its directors, necessary for the authorisation and execution of
  this Agreement, the authorisation, sale and delivery of the Purchase Shares
  and the performance of all of the Seller’s obligations hereunder have been
  taken. This Agreement constitutes
  and, when signed by its duly authorised representatives, all other documents
  contemplated hereby will constitute, valid and legally binding obligations of the Seller,
  enforceable in accordance with their terms.


	
 

	
 

	
 


	
 

	
4.3

	
Execution of Agreement








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
The execution and delivery of this
  Agreement (and the other documents contemplated hereby) by the Seller does
  not, and the consummation of the transactions contemplated hereby and
  thereby will
  not: 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(i)

	
constitute a
  breach of any law, rule or regulation of any government applicable to the
  Seller; 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(ii)

	
require the consent or agreement of any
  court, governmental body or entity or other third party, save for the
  Investment Centre, the Israeli anti-trust authority, and the Ministry of Communications
  regarding the Company’s Trade License for
  Establishment and Maintenance of Communication Stations; 





40









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(iii)

	
violate any
  provisions of the Seller’s Organisational Documents or materially violate any contract, agreement, indenture, mortgage,
instrument, lease,
  license, arrangement, or undertaking of any nature, written or oral, of the
  Seller;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(iv)

	
result in any violation of, or conflict
  with or constitute a default under any term of, or result in the
  creation or enforcement of any Security Interest upon any of the properties
  or assets of the Seller.


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
The execution, delivery and performance of
  and compliance with this Agreement and the
  other documents contemplated hereby by the Seller will not cause the Company to lose any
  interest in or the benefit of any asset, right, license or privilege, it
  presently owns or enjoys, and will not result in any present or future
  indebtedness of the Company becoming due prior to its stated maturity. The
  Company (without making verifications or investigations) is not aware that
  anyone who normally does business with the Company will cease to do so on the
  same basis as such business was previously conducted as a result of this
  Agreement. Compliance with the terms of this Agreement or the
  other documents
  contemplated hereby will not give rise to or cause any option or right of
  pre-emption to become exercisable. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
This Agreement constitutes
  and, when signed by its
  duly authorised representatives, the other documents contemplated hereby will constitute, valid and
  legally binding obligations of the Seller, enforceable in accordance with their terms.


	
 

	
 

	
 


	
 

	
4.4

	
Purchase
  Shares


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
The Seller
  is the owner of such number of the Purchase Shares free and clear of Security
  Interests. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
The Seller
  is entitled to sell the full legal and beneficial interest in the Purchase
  Shares to the Purchaser on the terms set out in this Agreement. 





41









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
The Purchase Shares:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(i)

	
are duly authorised,
  validly issued, fully paid and non-assessable and have the rights,
  preferences, privileges, and restrictions set forth in the Company’s Articles
  of Association;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(ii)

	
are free of
  any Security Interests, proxies, voting trusts and other voting agreements,
  calls or commitments of any kind, other than as explicitly contemplated by
  the Articles of Association of the Company; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(iii)

	
were issued in compliance
  with all laws, rules and regulations, including applicable securities laws.


	
 

	
 

	
 


	
 

	
4.5

	
Brokers and Finders


	
 

	
 

	
 


	
 

	
 

	
Neither the Seller, nor any of its
  employees, shareholders or the Subsidiary has employed or made
  any agreement with any broker, finder or similar agent or any person or firm,
  which will result in the obligation of the Company or the Purchaser to pay
  any finder’s fee, brokerage fees or commission or similar payment in
  connection with the transactions contemplated hereby.








	
 

	
 

	
 

	
 

	
 


	
5.

	
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER


	
 

	
 


	
 

	
The Purchaser hereby represents and warrants
  to the Seller as follows:


	
 

	
 

	
 


	
 

	
5.1

	
Incorporation


	
 

	
 

	
 


	
 

	
 

	
The
  Purchaser is a duly organized and validly existing corporation in good
  standing under the laws of the Republic of Singapore.





42









	
 

	
 

	
 


	
 

	
5.2

	
Authority to Transact


	
 

	
 

	
 


	
 

	
 

	
The
  Purchaser has the capacity and authority to execute and deliver this
  Agreement, to perform hereunder and to consummate the transactions
  contemplated hereby. All corporate action on the part of the Purchaser and
  its directors, necessary for the authorisation and execution of this
  Agreement, the purchase of the Purchase Shares and the performance of all of
  the Purchaser’s obligations hereunder
  have been taken including the approval of the Board
  of Directors of the Purchaser, Singapore Technologies Engineering Limited its
  listed parent company and Singapore Technologies Electronics Limited its
  immediate holding company which
  shall be obtained prior to signing this Agreement. This Agreement constitutes and, when signed by its
  duly authorised representatives,
  all other documents contemplated hereby will constitute, valid and legally binding obligations of the Purchaser,
  enforceable in accordance with their terms.


	
 

	
 

	
 


	
 

	
5.3

	
Execution of
  Agreement


	
 

	
 

	
 


	
 

	
 

	
The
  execution and delivery of this Agreement by the Purchaser does not, and the consummation
  of the transactions contemplated hereby will not, violate any provisions of
  the Organisational Documents of the Purchaser.


	
 

	
 

	
 


	
 

	
5.4

	
Disputes


	
 

	
 

	
 


	
 

	
 

	
There is no
  suit, action, proceeding, claim or investigation pending against the
  Purchaser that seeks to prevent the Purchaser from consummating the
  transactions contemplated hereby.


	
 

	
 

	
 


	
 

	
5.5

	
As a sophisticated investor with the experience in making capital
  investments, Purchaser acknowledges that it is capable of understanding and
  affording the financial risks associated with the transaction contemplated
  herein and that it has received information in respect to its request for
  deciding whether to enter into the transactions contemplated herein and has
  conducted a due diligence review of the Company. Purchaser further
  acknowledges that it was afforded the opportunity to raise questions and
  receive answers from Company management, including without limitation with
  respect to the Company’s business, financial affairs, assets, and
  liabilities. Purchaser also acknowledges receipt of all the Agreements and
  documents described in Schedule 5.5.


	
 

	
 

	
 


	
 

	
 

	
The provisions of this Section 5.5 shall be without prejudice to the
  representations and warranties of the Seller contained in Sections 3 and 4
  above.





43









	
 

	
 

	
 

	
 


	
6.

	
COVENANTS


	
 

	
 

	
 


	
 

	
6.1

	
From and after the signing of this
  Agreement and until the Closing, the Seller covenants and agrees with the
  Purchaser to fulfil the obligations set out in Sections 6.2 to 6.8.


	
 

	
 

	
 


	
 

	
6.2

	
The Seller covenants and agrees with the
  Purchaser that it shall procure that the Company shall not, without the prior
  written consent of the Purchaser or except to the extent otherwise set forth
  herein or in the schedules hereto, carry out or cause or permit the
  Subsidiary to carry out any of the following:


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
issue or sell any shares, stock, options or
  other securities or seek, negotiate or agree to any investment, direct or
  indirect, in the equity of the Company or the Subsidiary;


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
incur any
  capital expenditure or enter into any commitments with regard to capital expenditure in excess of $100,000


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
disposal of intellectual property rights of
  the Company in any manner to any third party;


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
dispose of
  or agree to dispose of (or grant any option in respect of) any part of the
  assets of the Company or the Subsidiary in excess of $100,000 or create any
  Security Interest on any part of the assets of the Company or the Subsidiary;


	
 

	
 

	
 

	
 


	
 

	
 

	
(e)

	
enter into any financing agreement or incur
  any indebtedness and draw down on any existing credit or overdraft facilities
  at the Company’s or the Subsidiary’s bank; 





44









	
 

	
 

	
 

	
 


	
 

	
 

	
(f)

	
enter into or be a party to any new
  transaction with any Affiliate or Subsidiary, except pursuant to the
  reasonable requirements of the Company’s business and upon fair and
  reasonable terms which are no less favourable to the Company than the Company
  would obtain in a comparable arm’s length transaction with a person or entity
  not a shareholder, 


	
 

	
 

	
 

	
 


	
 

	
 

	
(g)

	
enter into any agreement or take any action
  that is likely to cause any of the representations and warranties of the
  Seller under this Agreement not to be true and correct as of the Closing
  without change, or that is likely to affect the Closing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(h)

	
enter into any unusual or abnormal contract
  or commitment or grant or agree to grant any lease or third party right in
  respect of any properties, make any loan or enter into any leasing or other
  agreement or arrangements or payment on deferred terms other than in the
  ordinary course of business;


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
declare make
  or pay any dividend or other distribution other than a distribution made
  subject to strict compliance with Sections 2.1(a)(ii), 2.1(a)(iv) and 2.1(a)(v) or other than
  the Dividend Distribution Immediately Prior to Closing; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(j)

	
hire any executives at a monthly salary in
  the excess of $7,000 or modify or change materially the terms of any existing
  employment contracts for the Company’s employees;


	
 

	
 

	
 

	
 


	
 

	
 

	
(k)

	
agree or undertake to do any of the above.


	
 

	
 

	
 

	
 


	
 

	
 

	
In addition, the Seller shall notify the
  Purchaser of any transaction in excess of $250,000 or transactions in the
  aggregate in excess of $500,000.


	
 

	
 

	
 


	
 

	
6.3

	
The Seller
  further covenants with the Purchaser that the Seller shall not dispose of any
  interest in the Purchase Shares or any of them or grant any option over or
  create or allow to exist any Security Interest over the Purchase Shares or
  any of them.





45









	
 

	
 

	
 

	
 


	
 

	
6.4

	
The Seller
  shall not vote in favour of any shareholders’ resolution of the Company
  without the prior written consent of the Purchaser.


	
 

	
 

	
 


	
 

	
6.5

	
During the
  period prior to the Closing, the Seller shall procure that the Purchaser, its
  agents and representatives are given full access to the books and records of
  the Company and to the premises of the Company and the Seller shall, upon
  request, furnish such information regarding the business and affairs of the
  Company as the Purchaser may require.


	
 

	
 

	
 


	
 

	
6.6

	
No
  announcement or other disclosure concerning the sale and purchase of the
  Purchase Shares or any ancillary matter shall be made before or after Closing
  by the parties save in a form agreed between the parties or otherwise as
  required by law or by the Seller or Purchaser pursuant to their respective
  obligations as required under the rules or regulations of the respective
  stock exchanges where they are listed and quoted.


	
 

	
 

	
 


	
 

	
6.7

	
Notwithstanding
  any due diligence inquiry conducted by the Purchaser or any of its advisors,
  the Company undertakes to immediately inform the Purchaser in writing if at
  any time prior to the Closing it reasonably determines that: 


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
There has
  been a material adverse change in the business, assets, liabilities,
  financial condition or prospects of the Company or the Subsidiaries;


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Any of the
  conditions to Closing stated in Sections 2.3 will not be satisfied; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
Either
  Company or the Seller will not be able to fulfil any of their obligations
  under this Agreement.


	
 

	
 

	
 


	
 

	
6.8

	
The Seller
  agrees not to grant any license to any party in Korea or in China in violation
  of Section 4.3 of the License and Supply Agreement for Radio Location System
  dated 31 August 2004 between the Company and Vision Plant Inc., assigned to
  KLIC on May 18, 2005.


	
 

	
 

	
 


	
 

	
6.9

	
The Seller agrees to bear the reasonable
  costs and disbursements of (including attorneys’ fees) and cooperate with the
  Purchaser and the Company in Purchaser’s attorneys procuring the transfer of
  registration of ownership of the patents set out in Schedule 3.11(a)(ii) to
  the Company.





46









	
 

	
 

	
 

	
 

	
 


	
7.

	
INDEMNIFICATION AND REMEDIES


	
 

	
 

	
 


	
 

	
7.1

	
The Seller
  agrees to protect, defend, indemnify, and hold the Purchaser, its directors, employees and advisors harmless against and in respect
of any and all loss,
  liability, deficiency, damage, cost, or expense, or actions in respect
  thereof (including reasonable legal fees and expenses) (“Damages”), as and when incurred,
  occasioned by: 


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
any breach
  of this Agreement; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
any falsity
  of any of the representations and warranties of the Seller contained
  in Section 3 above (each such representation and warranty is deemed to be made on the date of
  this Agreement and at the Closing and shall survive the Closing) or any
  certificate or other instrument furnished or to be furnished by the Seller
  hereunder; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
any claim by
  a third party which if true would be such a misrepresentation or breach; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
any Tax
  liability arising from any dividend payments – including any dividends by the
  Company from tax exempt income or other distribution (including redemption of
  share capital) generated prior to the Closing – provided that such dividends
  are declared by the Company prior to the Closing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(v)

	
any Tax
  liability arising for the years ending December 31, 2005 and December 31,
  2006 and for the period from January 1, 2007 to the Closing Date. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(vi)

	
in addition
to the above, with regard to the following matters (“Employee Matters”):  





47









	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(A) any
  liability for unfunded severance pay obligations towards all Employees under
  any law or agreement (including but not limited to: any personal or
  collective employment agreements, extension orders and custom in the
  workplace) with regard to their period of employment up to Closing;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)
  Notwithstanding the generality of the above, any liability for unfunded
  severance pay obligations towards the Senior Employees with regard to their
  period of employment up to Closing; 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(C)
  liabilities for unfunded early pension or special severance payments required
  to be paid to Mr. Moty Veller and Mr. Zvi Ganor up to Closing;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(D)
  liabilities for unfunded early pension or special severance payments required
  to be paid to Mr. Moty Veller and Mr. Zvi Ganor due to the extension of their
  retirement age up to Closing; and


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(E)
  liability for unfunded increased severance payments required for 14 employees
  subject to collective bargaining agreements up to Closing;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(F)
  liabilities with regard to any recuperation pay entitlement towards the
  Senior Employees due to their period of employment by the Company up to
  Closing.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(G) bonus
  payments paid to Employees in accordance with past practice of the Company,
  in respect of the period up to Closing. 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(H) any
  liability for the period up to the Closing regarding characterization of any
  consultants as employees of the Company or the Subsidiary.


	
 

	
 

	
 

	
 


	
 

	
 

	
(vii)

	
any
  liability for Tax regarding Program 246, any prior dividend distribution or
  tax in connection therewith, any inter-company loan, repayment or waiver
  thereof, and any inter-company transfer prices; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(viii)

	
any
  liability to the Bird Foundation, the OCS and the Magnet consortium of the
  OCS for the period prior to the
  Closing;





48









	
 

	
 

	
 

	
 


	
 

	
 

	
(ix)

	
Any tax liability arising from any related
  party transactions subject to Section 85A of the Israeli Income Tax Ordinance
  which are conducted by the Company and made other than on an arm’s length
  basis in accordance with Section 85A of the Ordinance. 


	
 

	
 

	
 


	
 

	
 

	
Notwithstanding
  the aforesaid, the Seller shall be under no obligation to indemnify the
  Purchaser in respect of any one of the following: (i) any liabilities that
  are provided for in the Financial Statements; or (ii) any matter that has
  been taken into account in the reduction of the Enterprise Value pursuant to
  Section 2.1(ii)-(v) above.


	
 

	
 

	
 


	
 

	
7.2

	
In addition,
  the Seller agrees to defend, indemnify, and hold the Purchaser, its directors, employees and advisors harmless against and in
respect of any Damages, as
  and when incurred, occasioned by (i)
  any falsity of any of the representations and warranties of
  the Seller contained in Section
  4 above (each such representation and warranty is deemed to
  be made on the date of this Agreement and at the Closing and shall survive the Closing) or any certificate or other instrument
furnished or to be
  furnished by the Seller hereunder; or (ii) any claim by a third party which
  if true would be such a misrepresentation.


	
 

	
 

	
 


	
 

	
7.3

	
Promptly after (i) receipt by the
Purchaser (or any of its
directors, employees
and advisors) of notice of the commencement of any action, proceeding, or
investigation; or (ii) the Purchaser (or any of its directors, employees and advisors) becoming aware of any
breach of this Agreement or
falsity of representation, in each case, in respect of which
indemnity may be sought as provided above, such person (the “Indemnified
Party”) shall notify the Seller (the “Indemnifying Party”) of the claim and, when known, the facts constituting the
basis of
such claim. In the event of any such claim for indemnification hereunder resulting
from or in connection with any claim or legal proceeding by a third party,
the notice to the Indemnifying Party shall specify, if known, the amount of
damages asserted by such third party.  





49









	
 

	
 

	
 

	
 


	
 

	
7.4

	
Upon receipt
  of any such notice from the Indemnified Party, the Indemnifying Party shall
  be entitled to participate in the defence of such claim; and the Indemnifying
  Party may assume the defence of such claim if:


	
 

	
 

	
 


	
 

	
 

	
(a)

	
the
  Indemnifying Party confirms in writing its obligations to indemnify the
  Indemnified Party with respect to such claim reasonably acceptable to the
  Indemnified Party in all respects sufficient to ensure payment of all amounts
  which are indemnifiable hereunder;


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
the
  Indemnified Party, in its good faith discretion, does not notify the
  Indemnifying Party (in writing, with reasonable explanation) that it has
  determined a conflict of interest which makes separate representation by the
  Indemnified Party’s own counsel advisable;


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
the claim
  does not involve a claim for injunctive or other similar equitable relief
  against the Indemnified Party; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
(d)

	
the claim
  does not involve any criminal law claim against the Indemnified Party or its
  directors, officers, employees or agents. 


	
 

	
 

	
 

	
 


	
 

	
 

	
The Parties
  acknowledge and agree that in the event the Indemnifying Party has properly
  assumed the defence of such claims provided herein, the Indemnified Party
  shall be entitled to retain its own counsel to participate in the defence of
  such claim at its own cost and expense. 


	
 

	
 

	
 

	
 


	
 

	
 

	
The
  Indemnified Party shall not settle or compromise any claim without the prior
  written consent of the Indemnifying Party not to be unreasonably withheld.


	
 

	
 

	
 


	
 

	
7.5

	
No claim
  shall be settled or compromised by the Indemnifying Party without the written
  consent of the Indemnified Party if such settlement or compromise requires
  the Indemnified Party to make any payment or to take or refrain from taking
  any action or enjoins the Indemnified Party or subjects it to other equitable
  relief or subjects it to any potential criminal law, claim or liability.


	
 

	
 

	
 


	
 

	
7.6

	
Any claim for breach of a representation or
warranty under this Agreement shall be brought within the period commencing
the Closing Date and ending sixty (60) days following the publication of the
2009 financial statements of the Company, but in any event by no later than
May 31, 2010 provided that any claim regarding a breach of Sections 3.6
(Taxation) and 4.4 (Purchase Shares) may be brought at any time during the
applicable statute of limitations period. The parties shall execute a
Limitation Agreement, substantially in the form attached hereto as Exhibit
7.6. 





50









	
 

	
 

	
 


	
 

	
7.7

	
The provisions of this Section 7 shall not
  limit or impair any right or remedy arising from any breach of this Agreement.
  In addition to any other remedy provided by law or equity, injunctive relief
  may be obtained to enjoin the breach, or threatened breach, of any provision
  of this Agreement and each party shall be entitled to the specific
  performance by the other of its obligations hereunder and thereunder.


	
 

	
 

	
 


	
 

	
7.8

	
The rights of the Purchaser (and its directors, employees and advisors) to
  indemnification under this Section 7 shall not be affected by any examination
  made for or on behalf of the Purchaser or the knowledge of any of the
  Purchaser’s officers, directors, employees or agents, unless such matter is
  disclosed in this Agreement or any Schedule attached hereto. 


	
 

	
 

	
 


	
 

	
7.9

	
It is hereby agreed that in
  any event no claim will be brought against the Seller unless the damages
  exceed in aggregate US$500,000, and in such case the Seller should compensate
  the Purchaser only if the final amount due is in excess of $500,000, but in
  such case, the full final amount due shall be payable. In any event the
  Seller shall not be obliged to compensate the Purchaser for any indirect,
  incidental damages or loss of potential profits.


	
 

	
 

	
 


	
 

	
7.10

	
Furthermore,
  notwithstanding the aforesaid, any amount constituting any indemnification
  hereunder based on a decrease in value of the Company (but not any direct
  Damages of the Purchaser) shall be calculated as the Shareholding Percentage
  of the total amount to be indemnified (based on the Purchaser’s percentage
  holdings in the Company on the Closing). Furthermore, any such Damages which
  may be deducted as an expense for tax purposes, shall be calculated less the
  income tax which the Company would have paid without incurring such expense.





51









	
 

	
 

	
 


	
8.

	
MISCELLANEOUS


	
 

	
 

	
 


	
 

	
8.1

	
Communications


	
 

	
 

	
 


	
 

	
 

	
All notices
  or other communications hereunder shall be in writing and shall be given in
  person, by registered mail (registered international air mail if mailed
  internationally), by an overnight courier service which obtains a receipt to
  evidence delivery, or by facsimile transmission (provided that written
  confirmation of receipt is provided) with a copy by mail,
  addressed as set forth below:








	
 

	
 

	
 


	
 

	
If to the Seller:

	
Ituran Location and Control Ltd.
3 Hashikma St. Azour Israel
Fax: +972 3 557 1393 
Attn: Mr. Eyal
  Sheratsky


	
 

	
 

	
 


	
 

	
With a copy to:

	
Yoram
  L. Cohen, Ashalgi, Fisher, Eshel
2 Weizmann Street
Tel-Aviv
ISRAEL


  Fax: 972-3-6931919
Attn: Yoram L. Cohen, Adv. 


	
 

	
 

	
 


	
 

	
If to the Purchaser:

	
100 Jurong
  East Street 21, 

  Singapore 

  609602

  Attention: Legal Director

  Telephone: +65 6568 7117

  Facsimile: +65 6567 7920


	
 

	
 

	
 


	
 

	
with a copy to:

	
Herzog, Fox & Neeman
4 Weizmann
  Street,
Asia House
Tel-Aviv 64239
ISRAEL

Fax: 972-3-696-6464
Attn: Mr. Alan Sacks


	
 

	
 


	
 

	
or such other address as any party may
  designate to the other in accordance with the aforesaid procedure. All communications
  delivered in person or by courier service shall be deemed to have been given
  upon delivery, those given by facsimile transmission shall be deemed given on
  the Business Day following transmission with confirmed answer back, and all
  notices and other communications sent by registered mail (or air mail if the
  posting is international) shall be deemed given ten (10) days after posting.





52









	
 

	
 

	
 

	
 


	
 

	
8.2

	
Successors and Assignees


	
 

	
 

	
 

	
 


	
 

	
 

	
(a)

	
If the
  Purchase Shares shall at any time be sold or transferred to an Affiliate of
  the Purchaser, then (so long as the purchaser or transferee remains an
  Affiliate of the Purchaser) the benefit of each of the obligations,
  undertakings, indemnities, representations or warranties undertaken or given
  by the Seller under or pursuant to this Agreement shall be assignable to the
  purchaser or transferee of the Purchase Shares and such purchaser or
  transferee shall be entitled to enforce the same against the Seller as if it
  were named in this Agreement as the Purchaser (provided that the purchaser or
  transferee agrees to abide by any outstanding obligations on the part of the
  Purchaser herein).


	
 

	
 

	
 

	
 


	
 

	
 

	
(b)

	
Save as set
  out herein, none of the rights or obligations under or pursuant to this
  Agreement may be assigned or transferred to any other person without the
  written consent of all the parties.


	
 

	
 

	
 

	
 


	
 

	
 

	
(c)

	
This
  Agreement shall be binding upon and inure to the benefit of and be
  enforceable by the parties and their respective successors and assigns. 


	
 

	
 

	
 

	
 


	
 

	
8.3

	
Expenses 


	
 

	
 

	
 

	
 


	
 

	
 

	
The Seller
  shall be responsible for all costs incurred by the Seller and the Company in
  connection with the preparation and negotiation of this Agreement any other
  documents or
  actions relating to the transactions contemplated by
  this Agreement. The Purchaser shall be responsible for costs incurred by the
  Purchaser in connection with this Agreement.





53









	
 

	
 

	
 

	
 


	
 

	
8.4

	
Delays or Omissions; Waiver


	
 

	
 

	
 

	
 


	
 

	
 

	
The rights of a party may be waived by such party only in writing and
  specifically; the conduct of any one of the parties shall not be deemed a waiver of
  any of its rights pursuant to this Agreement and/or as a waiver or consent on
  its part as to any breach or failure to meet any of the terms of this
  Agreement or as an amendment hereto. A waiver by a party in respect of a breach
  by the other party of its obligations shall not be construed as a
  justification or excuse for a further breach of its obligations. 


	
 

	
 

	
 

	
 


	
 

	
 

	
No delay or omission to exercise any right,
  power, or remedy accruing to any party hereto upon any breach or default by
  the other under this Agreement shall impair any such right or remedy nor
  shall it be construed to be a waiver of any such breach or default, or any
  acquiescence therein or in any similar breach or default thereafter occurring.


	
 

	
 

	
 


	
 

	
8.5

	
Amendment


	
 

	
 

	
 

	
 


	
 

	
 

	
This Agreement may be amended or modified
  only by a written document signed by all the parties hereto.


	
 

	
 

	
 


	
 

	
8.6

	
Entire Agreement


	
 

	
 

	
 

	
 


	
 

	
 

	
This Agreement (together with the recitals,
  schedules, appendices, annexes and exhibits hereto attached hereto) contains
  the entire understanding of the parties with respect to its subject matter
  and all prior negotiations, discussions, agreements, commitments and
  understandings between them with respect thereto not expressly contained herein shall be null and void in their
  entirety, effective immediately with no further action required. The MOU dated April
  26, 2007 and executed between the parties is hereby null and void.





54









	
 

	
 

	
 

	
 


	
 

	
8.7

	
Severability


	
 

	
 

	
 

	
 


	
 

	
 

	
If a provision of this Agreement is or becomes illegal, invalid or
  unenforceable in any jurisdiction, that shall not affect the
  validity or enforceability in that jurisdiction of any other provision hereof
  or the validity or enforceability in other jurisdictions of that or any other
  provision hereof. 


	
 

	
 

	
 

	
 


	
 

	
 

	
Where provisions of any applicable law resulting in such illegality,
  invalidity or unenforceability may be waived, they are hereby waived by each
  party to the full extent permitted so that this Agreement shall be deemed
  valid and binding agreements. 


	
 

	
 

	
 


	
 

	
8.8

	
Counterparts,
  Facsimile Signatures


	
 

	
 

	
 

	
 


	
 

	
 

	
This Agreement may be executed in any
  number of counterparts, each of which shall be deemed an original but all of
  which together shall constitute one and the same instrument. A signed
  Agreement received by a party hereto via facsimile will be deemed an
  original, and binding upon the party who signed it.


	
 

	
 

	
 


	
 

	
8.9

	
Governing Law and Venue


	
 

	
 

	
 

	
 


	
 

	
 

	
The Agreement shall be governed by and
  construed in accordance with the laws of the State of Israel, without giving
  effect to the principles thereof relating to conflict of
  laws.
  The competent courts of Tel-Aviv shall have exclusive jurisdiction to hear
  all disputes arising in connection with this Agreement and no other courts
  shall have any jurisdiction whatsoever in respect of such disputes.


	
 

	
 

	
 


	
 

	
8.10

	
Further Actions


	
 

	
 

	
 

	
 


	
 

	
 

	
At any time and from time to time, each
  party agrees, without further consideration, to take such actions and to
  execute and deliver such documents as may be reasonably necessary to
  effectuate the purposes of this Agreement.





55









	
 

	
 

	
 

	
 


	
 

	
8.11

	
No
  Third-Party Beneficiaries


	
 

	
 

	
 

	
 


	
 

	
 

	
Nothing in
  this Agreement shall create or confer upon any person or entity, other than
  the parties hereto or their respective successors and permitted assigns, any
  rights, remedies, obligations or liabilities, except as expressly provided
  herein.





[rest of this page intentionally left blank]


56









[Signature Page of Share Purchase Agreement]


IN
WITNESS WHEREOF, this Agreement has been duly executed on the date herein
above set forth.


	
 

	
 

	
 


	
ITURAN
  LOCATION AND 

  CONTROL LIMITED

	
 

	
ST ELECTRONICS (INFO-COMM 

  SYSTEMS) PTE LTD


	
 

	
 

	
 


	
By: 

	
 

	
By: 


	
 

	
 

	
 


	
Name: 

	
 

	
Name: 


	
 

	
 

	
 


	
Title: 

	
 

	
Title: 


	
 

	
 

	
 


	
TELEMATICS WIRELESS LTD

	
 

	
 


	
 

	
 

	
 


	
By: 

	
 

	
 


	
 

	
 

	
 


	
Name: 

	
 

	
 


	
 

	
 

	
 


	
Title: